SEC Audit

I think the SEC investigation is trying to establish a policy over when a retailer/distributor can record the funds from the distributor. The real question for Nash is in the audit will they find the same thing that Kmart, Fleming and Ahold apparently did which is leverage the current industry practice into making claims that can't be substantiated or earned from vendors and then making larger claims each of the following periods.

Essentially you could write down the value of the last incorrect claim, but then record income for a larger one for the next period. Niether may be valid and would be fraud.

I don't think thye would have been so open with the SEC if they had been attempting to 'cook the books'. They have gone to the SEC and basically said: hey, we believe we did things right and our previous auditors concurred - tell us if this is right or not. If RM believed they had pushed into fraudulent territory, I think there would be more coevering going on.

Granted, it would be more of a comfort to investors if there was some type of communication, though this may have to do with the investigation. And, given the problems with AHO that have come to light, SEC may just be a tad too busy to get to the relatively minor (in their eyes) problem of NAFC.

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